Australia’s highest court takes a knife to indirect infringement: “carve-outs” in product information leaflets are a legitimate way of avoiding indirect infringement

Date: 2013-12-17
Authors: Milena Dryza & Damian Slizys

Under Australian law, indirect or contributory infringement of method of treatment claims has been an issue for quite some time. In particular, there have been a number of injunctions granted in circumstances where an infringing indication had been specifically “carved-out” (either by complete deletion or explicit disclaimer) of a drug supplier’s product specifications. This is because the courts concluded that, due to the prescribing practices of doctors and dispensing habits of pharmacists, the sale of such a product may still infringe.

The High Court in Australia (the equivalent of the US Supreme Court) has now clarified the position in respect of contributory infringement of method of treatment claims, overturning the lower court’s finding and providing certainty for “generic” entrants seeking to carve-out indications in an attempt to mitigate against a finding of patent infringement1.

In the same decision, the High Court, for the first time, considered (and decided on) the patentability of methods of medical treatment of human beings. In this article we will be focussing on the infringement aspect of the decision. The decision on patentability of methods of medical treatment is dealt with in a separate article see: Pharmaceutical companies breathe a sigh of relief: Australia’s highest court confirms that methods of medical treatment are patentable.

We have discussed the decision of the lower court in this case in an earlier article: Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (Part 2) – Contributory infringement. The issue on appeal before the High Court was whether the sale of a generic leflunomide product by Apotex Pty Ltd (“Apotex”) for the treatment of rheumatoid arthritis (RA) and psoriatic arthritis (PsA) would infringe the single claim of Sanofi-Aventis Deutschland GmbH’s Australian patent number 670491. The claim is:

A method of preventing or treating a skin disorder, wherein the skin disorder is psoriasis, which comprises administering to a recipient an effective amount of a pharmaceutical composition containing as an active ingredient a compound of formula I or II…

The compound of formula I is the active leflunomide.

As discussed in an earlier article: Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd - Claiming intent, the trial judge at first instance found as facts that:

(i) a person suffering from RA may have or develop psoriasis;
(ii) a person suffering from PsA will almost always have psoriasis; and
(iii) by administering leflunomide to a person with RA and/or PsA (as taught in the prior art), any psoriasis that the patient may have or may develop would inevitably be prevented or treated.

Despite the fact that Apotex supplied leflunomide with a Product Information (PI) leaflet which included a statement that its leflunomide product “is not indicated for the treatment of psoriasis when it is not associated with manifestations of arthritic disease”, the appeal judges still held that, because psoriasis would inevitably be treated when Apotex’s generic leflunomide product was administered to a patient, Apotex, through its PI, instructed rheumatologists to use leflunomide to treat psoriasis. In addition, it was held that Apotex had reason to believe that its generic leflunomide product would be used in a method of preventing or treating psoriasis. Therefore, it was held that the provisions relating to infringement by supply of products (section 117 of the Patents Act 1990) were engaged, and Apotex was therefore found to infringe the claim by way of contributory infringement.

In deciding the issue on appeal, the High Court considered the way in which the Therapeutic Goods Administration (TGA) defines and registers therapeutic goods, and noted that therapeutic goods that are listed on the Australian Register of Therapeutic Goods (ARTG) are taken to be “separate and distinct” from other therapeutic goods if they have, amongst other things, a “different name”, “different indications”, or “different directions for use”. The Court also noted the importance that the TGA placed on the PI and the accuracy of the information contained in it (including the indications).

The High Court also considered the legislative history of the contributory infringement provision (in Australia as well as the US), and the recommendation (which was ultimately accepted) of the Intellectual Property Advisory Committee (IPAC) report in relation to that provision, which stated that:

…in general the supply of goods whose only use would infringe a patent, or which are accompanied by a positive inducement for the ultimate consumer to perform actions which would innocently or knowingly infringe a patent should itself be an infringement of the patent (emphasis added).

The High Court considered that it was difficult to see “how the supply of an unpatented product, the use of which by a supplier would not infringe a method patent, can give rise to indirect infringement of a method patent by a recipient of the unpatented product from the supplier”, particularly given that it is not a direct infringement of the method patent to simply supply the generic leflunomide product (without exploiting the claimed method).

The High Court therefore held that, because Apotex’s approved PI does not instruct recipients to use its generic leflunomide product in accordance with the patented method, and that Apotex had no reason to believe that leflunomide would be used by recipients in accordance with the method, Apotex did not infringe the patent.

This decision appears to be more consistent with the purpose of the contributory infringement provisions than the decision of the lower courts. It is also consistent with the construction of the claim adopted by the lower courts, all of which held that the claim was valid in light of Sanofi’s earlier patent, which disclosed leflunomide, and its use for the treatment of inflammations, rheumatic complaints and multiple sclerosis.

Notably, the Australian government’s recent review of IP law in relation to pharmaceuticals (see our earlier article: Key recommendations from the Australian pharmaceutical patents review) recommended, in light of the Federal Court of Appeal’s decision in this very case, amending the contributory infringement provisions to make it clear that a pharmaceutical manufacturer does not contribute to infringement of a patent where that manufacturer has taken reasonable steps to avoid infringement. It also recommended that where the labelled indications on the product do not include any infringing indications, there should be a presumption that reasonable steps have been taken. The intention of these amendments is to permit carve-outs in PIs and on product labels.

1. Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd [2013] HCA 50.